Press "Enter" to skip to content

Indonesia’s Forex Reserves Reached Record High Last August

Shares

Key Points

  • Indonesia’s foreign exchange reserves soared to a record high in August mainly due to the government’s foreign borrowing, oil and gas proceeds, and tax collection, Bank Indonesia has reported.
  • The nation’s forex reserves rose by $1.9 billion to $137 billion, surpassing a month earlier record of $135.1 billion. The new reserves status will allow foreign debt and nine months of imports to be paid out.
  • As of 12:30 pm, the rupiah increased 0.14 percent to 14.730 per dollar after suffering heavy losses last week amid worries about the independence of Bank Indonesia following a new legislative initiative to reform central bank regulation.
  • Visit The Financial Today’s homepage for more stories.

Indonesia’s foreign exchange reserves soared to a record high in August mainly due to the government’s foreign borrowing, oil and gas proceeds, and tax collection, Bank Indonesia has reported.

The nation’s forex reserves rose by $1.9 billion to $137 billion, surpassing a month earlier record of $135.1 billion. The new reserves status will allow foreign debt and nine months of imports to be paid out.

“Bank Indonesia views the forex reserves level as adequate to support external stability and maintain macroeconomic and financial system stability,” the central bank said in a statement.

“The forex reserves level will remain adequate, supported by stability and a positive outlook for the economy, in line with various policy responses to push for economic recovery.”

The government is facing a daunting challenge as it aims to raise Rp 900.4 trillion from issuing sovereign debt papers in the July-December period to cover its budget deficit of 6.34 percent of the gross domestic product as tax collection and non-tax revenue dropped as a result of the coronavirus pandemic slowing economic activity.

It had previously agreed to raise loans of $5.5 billion from multilateral organizations.

As of July, the government has collected Rp 601.9 trillion in tax revenue, down 14.7 percent year-on-year, and about 50 percent from the target of this year. Meanwhile, non-tax oil and gas revenues as of July amounted to Rp 44 trillion, down 34.8 percent year-on-year.

“Although the downside risks for Indonesia’s economy from the COVID-19 pandemic has declined, the risks still remain and that places some uncertainty on the domestic financial market,” said Bank Mandiri economist Andry Asmoro.

During the pandemic, the delays in foreign direct investment which could cause capital and financial outflows would put pressure on forex reserves and the rupiah exchange rate, he added.

As of 12:30 pm, the rupiah increased 0.14 percent to 14.730 per dollar after suffering heavy losses last week amid worries about the independence of Bank Indonesia following a new legislative initiative to reform central bank regulation.

Andry expects the rupiah exchange rate to be around Rp 14,296 per US dollar by the end of 2020, adding that the current account deficit (CAD) of the country will be reduced to 1.49 percent of GDP.

“Imports are decelerating faster than exports due to postponement in production and investment activities amid the pandemic,” he said, adding that as a result the CAD will diminish and thus boost the balance of payments of the country.

Be First to Comment

Leave a Reply

Hi, I'm Alfred Cardenas!We’re running an equity crowdfunding campaign.

This is your chance to invest and own a part of The Financial Today!